Sell your house in a falling market and get rich in today’s troubled real estate market
This article will show you how to avoid a huge mistake almost everyone is STILL making when they try to sell houses in today’s market.
Here’s how I learned it…
When I met my wife, I was a bigshot stock market investor. I had made a bunch of money in the market. Wow, was I smart!
Until a friend of a friend was visiting. She asked me about my approach and I bragged to her about how smart I was and how well I did in stocks.
My friend’s friend, unlike me, had been a professional investor for at least a decade or three. She had a ton of experience not just in a rising market, but also in a falling market.
She laughed. “Everyone’s a genius in a rising market,” she said. “You could throw darts at a list of stocks and buy whatever you hit and make money.”
Wow. She was right! I wasn’t a genius at all. I was smart enough to be IN a rising market. The rest of it, was no work or smarts on my part at all. It was simply a matter of being IN the market and making money.
I’ve been doing real estate since 1989 and it’s the same in real estate. You can always make money in a rising market. Anyone can. It’s how you handle a FALLING market that determines how much money you make year in and year out.
Real estate follows a roller coaster of cycles. It is up from 1970 to 1979, then busted until 1985 or so. Then it is up until 1990, then it falls until maybe 1995. Then it is up up up and now it gets weird because it is up until 2005. Then it falls falls falls.
photo credit: http://www.flickr.com/photos/mgrayflickr/
Today, are we at the bottom yet? Who knows. I have some ideas. But I do know that you CAN make money in today’s falling market. A LOT of money. But you first have to avoid the most common mistake that people make. People who haven’t survived a falling market and made money in it the LAST time the real estate market crashed.
Selling a house in a bad market takes the opposite set of skills and opposite strategy
When the market is rising, and you want to sell a house, this is the recipe:
Look at what the other houses recently sold for and price your house a little above those. Then wait and see what happens. If nobody bites, then lower the price maybe 3% – 5% and try again.
That’s what I call laddering down. You start high and then expose the house to the market. Then you lower the price one “rung” and try again until you make a sale.
photocredit: http://www.flickr.com/photos/busbeytheelder/
That’s the right approach in a RISING market but the wrong approach in a FALLING market.
In today’s falling market, to sell houses, you have to start LOW. Very low. And then you encourage a lot of market activity. Multiple offers. And you raise the price, or get into a bidding war with several astute and smart buyers and end up at a market price by starting LOW.
See how much smarter this is? When you get under contract and it’s a short sale, you have fewer problems keeping the buyer on the hook because they know they got a super deal.
Where, if you start high and get a buyer, chances are that as soon as the lender delays anything, the buyer will be impatient and walk. Because they aren’t convinced they got a super deal so they aren’t willing to be patient and wait on the inevitable delays.
photocredit: http://www.flickr.com/photos/rmlowe/
Also, with this “start low” strategy, you can sometimes get multiple offers so you have a natural backup offer already baked in the cake.
How to get loads of buyers in a bad market
There is one way to really get loads of buyers competing and that is the 9 Day House Sale. That’s where you start very low, say at 50% of what you expect to get, and you don’t show the house over weeks and months. No, you get EVERYONE in for a single weekend and you get 10 or 20 or 40 people bidding against each other.
Regardless of whether you do the 9 Day House Sale or not, remember to start low rather than high in today’s falling market. Be the cheapest house for sale among comparables being offered, and sell quickly and without having your property simply sit on the market.
Please comment or ask questions. Thank you.
Would like to partner on some deals. I have the site set up for buyers and sellers, also motivated and tire kickers, it captures data for both.
Thanks,
God Bless !!!!!
Richard,
This makes perfect sense. Once there is a bidding war going on for the property then the price can only go up. And once you have many people there at the same time, not coming at different time periods in the same day, but all there at the very same time, then each person wants the deal for themselves and will offer whatever it takes for them to get it.
I love it.
Fine, but how do you deal with a market where every day the listings banks have been holding back on are starting to be dumped on the market? I still cannot establish a bottom because the banks just keep undercutting even a 50% discount off of prices from just ten months ago. It’s still a moving target around here.
Behing pmts need loan mod for comercial property. How much will cost it you team do it
If banks are not lending and potential homeowners have challenged credit, then houses do not sale. But your idea above does make perfect sense as long as the buyer can get a loan. I am seeking buyers right now that can pay an assignment fee, takeover someone’s mortgage payments they get a house with seller financing and a deed.
I don’t think you can do that in Michigan. You’re obligated to sell to the first buyer who meets your “low” listing price.
Don, I do not want to be argumentive, but I think your wrong. It depends on how you promote the sale. Indicate you will accept the best acceptable offer exceeding the starting price. I had a 7 day sale a few months ago that was a dismal failure. Had advertized extensively, had about 50 calls, and had 3 people show up, none of whom were looking to buy the house. I then listed the house with an agent I had been speaking with, her reply was this was the nicest house she had seen in the area, and I had an acceptable offer within 2 days, and 5 offers in 5 days. All in the same price range. I was surprised really and the offers were for about 25k more than I would have taken, that paid for my prior advertising costs and the agents commission. I got lucky.
Wow. This seems like a great way for a listing agent to unload REOs at a fair price for all. Competition is great and gets to a fair price. Problem is Banks seem to always need months to make up their mind.
I’ve heard a slight variation of this strategy before and it makes a lot of sense for someone who has been in the REI business for awhile but for the newbie starting out with wholesaling assignment contracts, it will take some time to work up to a deal like that. Yet, it is definitely something to look forward to doing and worth the effort of working toward.
wow with this (free) information the big hill to climb is to put it into action for this I thank you
Great suggestion, Richard, assuming it is a “normal” sell and (obviously) the buyers can qualify for bank financing. Actually, I’ve seen this happened a lot with shortsale and foreclosure properties…especially in the good neighborhoods.
Hi Fernando A., I’m currently doing commercial investing and would love to help you with your commercial troubled. Pls give me a ring at (408)464-2952 and leave a brief msg with your contact #, so I can call you back.
Thanks!
How do I order the course? there isnt a link on the website thanks
I want to sell my houes because of sick.